The new Practice Direction updates the previous Practice Direction by making reference to the Insolvency Rules 2016, taking account of recently decided cases and changes with regards to the Business and Property Courts Practice Direction, specifying new arrangements for the distribution of insolvency business across the different levels of the Judiciary, and clarifying the routes of Appeal in insolvency cases.
The new Practice Direction has now finally resolved the conflict between the Practice Direction and the Insolvency Act 1986, and the Insolvency Rules 2016. The new Practice Direction, which came into force on 25th April 2018, has now brought the Practice Direction in line with the changes introduced by the above Legislation and has aligned the procedure.
Whilst the changes appear to be pretty straightforward, we believe there are a few noteworthy amendments that require highlighting:
Distribution of Businesses
- The categories of Applications which must be listed before a High Court Judge have been made narrower under the new Practice Direction, and only Applications for committal for Contempt, Freezing Orders, Search Orders and Ancillary Orders under CPR 25.1(1) (g) must be listed before a High Court Judge (paragraph 3.3).
- Insolvency and Company Court Judges can now hear (paragraph 3.4):
- Administration Applications
- Injunction Applications (other than those listed above)
- Applications for the appointment of provisional Liquidators
- A district Judge in a County Court with Insolvency Jurisdiction may hear Applications to set aside Statutory Demands, unopposed Creditors’ Winding-Up Petitions or unopposed Bankruptcy Petitions. NB. Insolvency Applications not listed above, issued in a County Court are required to be transferred to be heard by a District Judge in the relevant District Registry or an Insolvency and Company Court Judge in the Royal Courts of Justice (paragraph 3.7-3.8).
- Applications which may be dealt with by Court Officials in the Royal Courts of Justice have also changed:
10.1 In accordance with rule 12.2(2), in the Royal Courts of Justice an Officer acting on behalf of the Operations Manager or Chief Clerk has been authorised to deal with Applications:
(1) To extend or abridge time prescribed by the Insolvency Rules in connection with Winding Up;
(2) For permission to withdraw a Winding Up Petition (rule 7.134);
(3) Made by the Official Receiver for a public examination (s.133 (1) (c) of the Act), where no penal notice is endorsed and no unless order is made;
(4) Made by the official receiver to transfer proceedings from the High Court to a specified hearing centre within the meaning of rule 12.30;
(5) To list a Hearing for Directions with a time estimate of 30 minutes or less in circumstances where both parties are represented without reference to an Insolvency and Company Court Judge;
(6) For a first extension of time to serve a Bankruptcy Petition.
13.1 In accordance with rule 12.2(2), in the Royal Courts of Justice an Officer acting on behalf of the Operations Manager or Chief Clerk has been authorised to deal with Applications:
(1) By petitioning Creditors to extend the time for hearing Petitions (rule 10.22);
(2) By the Official Receiver:
(a) To transfer Proceedings from the High Court to a specified Hearing Centre within the meaning of rule 12.30.
(b) To amend the title of the Proceedings (rule 10.165).
Winding Up Petitions and Bankruptcy Petitions filed electronically will not be treated as being presented until the Court fee and Official Receiver’s deposit is paid. Until such time as the deposit is paid the petitions will be marked “private” and will not be available for inspection. If the deposit and fee are not paid with 7 days the Petition will not be accepted (paragraphs 9.3 and 12.4).
Also, e-filing may not be used for Notices of Appointment of Administrators filed outside Court hours. Notices of Appointment outside business hours must continue to be filed in accordance with rule 3.20 and 3.22 of the Insolvency Rules 2016 (para 8.1).
However, there still remains no guidance on how to comply with 3.24(1) (j) or 3.25(2) (k) of the Insolvency Rules 2016 – the requirement for a Notice of Appointment filed by the Company to state the “date and time of the appointment” (when read in conjunction with paragraph 31 of Schedule B1 to the Act).
The new Practice Direction sets out a new procedure on appeals to accommodate the changes that were incorporated into 12.59 and Schedule 10 to Insolvency Rules 2016 in relation to Appeals in corporate insolvency. However, rather than the Practice Direction clarifying the issue, it in fact contradicts the Rules:
- 59(4) of the Rules explicitly includes within the definition of each level of the judiciary “a person appointed to act as a deputy for any person holding that office”; para 17.5 of the new Practice Direction excludes the possibility of Appeals and Applications for Permission to Appeal being heard by Deputy Judges (either Deputy High Court Judges or Deputy Insolvency and Company Court Judges): paras 17.5(2)-(3); 17.5(7)-(9).
Whilst it appears that these were introduced to simplify to effects upon the new routes of Appeal in Corporate Insolvency, the authority to impose these restrictions aren’t made explicit. It will be interesting to see how this develops in practice.
Paragraph 19 provides useful guidance on filing, as follows:
- 1 An Application for permission to Appeal or an Appeal from a decision of an Insolvency and Company Court Judge which lies to a High Court Judge must be filed at the Royal Courts of Justice.
- 2 An Application for permission to Appeal or an Appeal from a decision of a District Judge Sitting in a District Registry must be filed in that District Registry.
- 3 An Application for permission to Appeal or an Appeal from a decision of a District Judge must be filed in its corresponding Appeal Centre, as identified in the table in Schedule 10 of the Insolvency Rules.
Re: Budniok  EWHC 368 (Ch)
Clarification is also provided for the nature of Appeals under s.263N(5) of the Act against the decision of the Adjudicator, which are to be treated as the first Hearing of the matter (i.e. not a “true appeal”) and no permission is required (paragraph 17.3).